NEW YORK -- U.S. stocks dropped yesterday amid concern for earnings at companies most sensitive to the economy and the course of interest rates. Auto, chemical and semiconductor issues were among the session's biggest losers.
Trading was curtailed as stock exchanges closed 90 minutes early while a fierce snowstorm battered the eastern half of the country.
"Several important earnings announcements over the past several days have moderately disappointed the most optimistic analysts," said Tom McManus, vice president at Morgan Stanley & Co.
General Motors Corp. and Ford Motor Co. were among stocks that fell after reporting improved profits this week.
The Dow Jones Industrial Average rebounded to close down 0.56, at 3,894.78, after dropping as much as 27.86 in the morning. GM, Goodyear Tire & Rubber Co. and Aluminum Co. of America led the index lower. The Dow gained 23.36 points during the week, after plunging 96 points last Friday.
The Nasdaq Combined Composite Index fell 2.03, to 781.39, driven by losses in technology stocks such as Novell Inc., Oracle Systems Corp. and Microsoft Corp.
The Standard & Poor's 500 Index rose 1.25, to 470.18, boosted by stronger telephone, oil, food and utility shares.
Almost 11 stocks fell for every seven that rose on the New York Stock Exchange, where volume fell to 261 million shares, the lowest since New Year's Eve, from 325.8 million yesterday.
The Morgan Stanley Cyclical Index, a measure of economically sensitive stocks, fell 2.41, to 314.07. Phelps Dodge dropped $2.375, to $53.375; Goodyear declined $1.25, to $45.875; Dow Chemical Co. fell $1, to $63.50; and Alcoa slid $1.125, to $78.125.
"Although earnings seem to be higher than consensus estimates, there was a group [of investors] that was looking for significant outperformance," Mr. McManus said. "This whole group has led the market for the first part of 1994. Those stocks may have temporarily overshot their targets."
Stocks fell for most of the session after the Labor Department said producer prices in January rose 0.2 percent. Fruit and vegetable costs were lower, and gasoline prices were higher. Economists had forecast a 0.4 percent increase, with some expecting a 0.6 percent rise.
In another report, the Commerce Department said retail sales fell 0.5 percent last month as auto sales dropped, further dampening concern that the economy is overheating.
After the two reports, the yield on the benchmark 30-year Treasury bond rose as high as 6.47 percent, the highest level since Aug. 9, before retreating to 6.41 percent, down from 6.44 percent Thursday.